Pharmacy Law: Repackaged Imported Drugs Exempt?

Dr. Fink is professor of pharmacy law and policy at the University of Kentucky College of Pharmacy, Lexington.

Issue of the Case

When a company based in another country ships prescription medications to the United States for repackaging and resale, how do FDA regulations apply?

Facts of the Case

A firm based in Cura?ao, Netherlands Antilles, focused its business on the purchasing, trading, and selling of pharmaceuticals. One part of its activities was to purchase medications abroad and import them into the United States for resale.

The firm purchased a quantity of tablets of a popular cholesterol-lowering agent in Brazil with the goal of importing it into the United States. Before doing so, the firm filed an action for declaratory judgment in a federal trial court, seeking to have the court declare that its proposed actions were consistent with the Federal Food, Drug, and Cosmetic Act. The federal court judge declined to rule on the case because it was not yet ?ripe? (ie, the facts were not yet fully developed, because the agency had not taken regulatory action for the court to review).

The firm proceeded with the importation, and the medication was seized by FDA officials because it did not comply with certain facets of the New Drug Application (NDA) that the agency had approved for the drug product, making it an unapproved new drug in the view of the agency. Pointing to provisions in the statute as well as in the FDA?s regulations, the company argued that the statute contains an exemption from all labeling and packaging standards, including NDA requirements, if the medication is being shipped to or held for repackaging by an authorized repackaging firm.

The Court?s Ruling

When the case came before the federal trial court the second time, the court deemed that the case was now ?ripe? for a decision. That court ruled that the repackaging provision was inapplicable to this situation, and the firm had introduced unapproved new drugs into interstate commerce in violation of the statute. The medication had properly been seized by the representatives of the FDA, and the court entered an injunction prohibiting the firm from engaging in additional importation. It was that decision of the trial court that the company appealed to the federal appellate court, asking the higher court to reverse the decision of the judge in the lower court.

The Court?s Reasoning

The appeals court began with the point that the interpretation of a statute used by the agency charged with enforcing that law is entitled great weight. The provision in the statute that the importer had been relying on merely ?directs the secretary [of Health and Human Services] to promulgate regulations exempting drugs en route to a repackager from labeling and packaging requirements; it does not itself provide a complete exemption.?

The court then turned its attention to the relevant FDA regulation. Its conclusion, following review of that provision, was that the provision ?does not exempt drugs in transit to or at a repackager from all labeling and packaging requirements in the act.? In the view of the court, the regulation only provided an exemption from requirements specifically listed in the wording of the rule.

Turning again to the wording of the statute that authorized the regulation, the court concluded that the language adopted by Congress was sufficiently ambiguous that the agency was entitled to make a reasonable interpretation of it for implementation. Examining the wording of both the statute and the regulation, the court concluded that the interpretation being used by the FDA was not ?arbitrary or capricious??the applicable legal standard for such matters. The FDA?s approach of exempting drug products in transit for repackaging from only selected labeling and packaging requirements ?is a permissible exercise of the authority delegated by the statute, and is consistent with the public health concerns animating the new drug approval process and the statute as a whole.?

A Sidelight

The fictionalized name of the firm involved in this litigation with the FDA included this: ABC Pharmaceuticals, NV. Perhaps you have seen that notation?NV?following the name of a business firm and have wondered what it means. This firm was based in the Netherlands Antilles, 2 groups of islands in the Caribbean Sea?Cura?ao and Bonaire, located off the coast of Venezuela, and Saint Maarten, Saba, and St. Eustatius, located east of the US Virgin Islands. Because these governments are part of the Kingdom of the Netherlands, they follow Dutch law. Under the law of that country, a Naamloze Vennootschap, abbreviated NV, is a publicly held, limited liability company. NV is parallel to Inc in the United States.